"We have tried to put our heads together and look over the budget and try to find a solution that our council can live with and our taxpayers can live with," said Tom Fox, city manager.

He explained how department heads submitted significantly shaved budget plans, but that it was determined that the cuts would significantly affect the city's ability to provide basic services to its residents.

Therefore, the city is exploring the option of a tax anticipation loan - a low interest, short term loan - to tide them over until the city collects an estimated $226,076.67 in sewer tap fees in 2012, when units in the Porterdale Mill Lofts become available for purchase.

"2012 will really be a windfall for the city," Fox said.

According to councilmember Arline Chapman, owner of the lofts Walter Davis said 50 to 60 percent of the residents have purchased the option to buy their unit and will likely do so. If 60 percent of the current residents at the lofts purchased their unit in 2012, each would owe the city $2,791.07 at closing for a sewer tap fee - generating the previously stated figure. The sale of the remaining units would net the city an additional $150,317.78, for an estimated total of $376,794.45.

Fox said if the council approved this measure, they would not need to adopt a millage rate of 14.26 as proposed earlier in the month as a solution to the budget gap. Instead the city would adopt a rollback rate of 9.156, which is actually higher than the current millage rate, but would not result in higher tax bills because of depressed property values.

"I think the employees need to be commended on what they've done on this," said Mayor Bobby Hamby of the measure that would prevent Porterdale from raising the millage rate or cutting services.

Already this year Porterdale has laid off a code enforcement officer and a public works field supervisor, has not filled a vacant position in public works, temporarily reduced employees' work hours, reduced overtime, changed public works' uniform plan, changed cell phone plans, reduced the training budget and declined invitation to Georgia Municipal Association's annual convention. The sale of sewer capacity to Newton County also helped the city meet expenses last year, but that option is not available to the city this year.

"I would discourage the council from entertaining any lay offs or furloughs or anything like that," said Fox, adding that not only would it further decrease employee morale, but also be unfair to residents who expect a certain level of services to be maintained.

Most members of the council also disliked the idea of almost doubling the millage rate to balance the budget.

"I think that these are not the times that we should keep hitting these people over the head," said Chapman of tax increases. She added that she was in favor of adopting a local homestead tax exemption for homeowners residing in Porterdale, especially as incentive for homeowners to stay and as an attraction for potential home buyers. Fox said that the city attorney was researching this option and said that currently it can only be done through General Assembly approval.

The Porterdale council must decide on a budget measure at their Sept. 14 regular meeting. If they decide to go with a tax anticipation loan, they may borrow up to 75 percent of the expected revenue and must pay off the loan within the fiscal year in which it is borrowed. Fox said the city would likely borrow 45 percent of the expected revenue in July 2010 to avoid excessive interest payments. He added that if development regains momentum in Porterdale, a loan may not be needed at all.